Expandable polystyrene (EPS) and polystyrene (PS)

SINGAPORE (ICIS)–Japanese automaker Nissan Motor Corp announced on Tuesday a slate of new cost-saving measures, including job cuts of 11,000, after swinging to a net loss of yen (Y) 670.9 billion ($4.5 billion) in the fiscal year ending 31 March 2025. in Japanese yen (Y) billion 1 April 2024-31 March 2025 (FY 2024) 1 April 2023-31 March 2024 (FY 2023) % Change Net Revenue 12,633.20 12,685.70 -0.4 Operating Profit 69.8 568.7 -87.7 Net Income -670.9 426.6 Global sales stood at 3.346 million units, impacted by intensified sales competition. The latest results come after the collapse of multi-billion-dollar merger talks with rival Honda in February 2025 and follows a November 2024 announcement of 9,000 job cuts. The latest reductions will bring the total job losses at Japan's third-largest carmaker to around 20,000 in the last fiscal year. Nissan also plans to streamline its production by reducing its global plant count from 17 to 10 by 2027. Petrochemicals make up roughly a third of an average vehicle's raw material costs. The automotive industry is a crucial driver of demand for chemicals such as polypropylene (PP), nylon, polystyrene (PS), and styrene butadiene rubber (SBR). Nissan said that it expects business to "continue be challenging with intense competition, forex and inflationary pressure". "Yet, our efforts related [to] U.S. Tariff policy under our mitigation strategy, we are prioritizing US-built products, optimizing local capacity, reallocating tariff-exposed production, and working closely with suppliers to localize and adapt swiftly to market demands," the company said. "Given the uncertainty related to tariff environment, the guidance for operating profit, net income and auto free cash flow for the fiscal year are currently to be determined," it added. ($1 = Y147.9)

13-May-2025

HOUSTON (ICIS)–Several shares of chemical companies closed sharply higher on Monday after the US and China agreed to sharply reduce their tariffs for 90 days. The following table shows the major indices followed by ICIS. Index 12-May Change % Dow Jones Industrial Average 42,410.10 1,160.72 2.81% S&P 500 5,844.19 184.28 3.26% Dow Jones US Chemicals Index 822.31 17.02 2.11% S&P 500 Chemicals Industry Index 877.99 15.41 1.79% The lower rates take effect on 14 May. For the US, it will lower its 2025 tariffs on Chinese imports to 30% from 145%. The 30% tariff is made up of the 20% fentanyl tariffs that the US adopted earlier in 2025 as well as the 10% baseline tariff that the US has imposed on most of the world. For China, it will cut its 2025 tariffs on US imports to 10% from 125%. The 10% tariff matches the baseline rate that the US has imposed on Chinese imports. China also suspended the non-tariff measures that it has taken since 2 April. The agreement does not mention the tariffs that China had imposed in February on a limited number of US imports, including liquefied natural gas (LNG). Nor does the agreement mention the restrictions on antimony and other minerals that China announced in December 2024 as well as those on bismuth and other minerals announced in February 2025. Monday's pause does not change the tariffs that the two countries adopted during the first term of US President Donald Trump. Still, the agreement removes a substantial amount of tariffs, which should stimulate some trade. Fitch Ratings estimates that the effective US tariff rate fell to 13.1% from 22.8%. The following table shows the performance of the US-listed shares followed by ICIS. Name $ Current Price $ Change % Change AdvanSix 24.21 1.10 4.76% Avient 39.01 2.21 6.01% Axalta Coating Systems 32.7 1.60 5.14% Braskem 3.79 0.17 4.70% Chemours 11.99 0.93 8.41% Celanese 54.53 3.32 6.48% DuPont 71.27 4.50 6.74% Dow 30.98 1.50 5.09% Eastman 82.77 5.27 6.80% HB Fuller 57.03 2.50 4.58% Huntsman 12.93 0.88 7.30% Kronos Worldwide 7.55 0.27 3.71% LyondellBasell 60.68 3.75 6.59% Methanex 34.48 2.04 6.29% NewMarket 636.65 2.17 0.34% Ingevity 43.04 2.57 6.35% Olin 22.86 1.53 7.17% PPG 114.21 5.45 5.01% RPM International 114.27 3.74 3.38% Stepan 55.86 1.96 3.64% Sherwin-Williams 357.15 5.29 1.50% Tronox 5.77 0.52 9.90% Trinseo 2.54 0.02 0.79% Westlake 85.66 5.66 7.07%

12-May-2025

HOUSTON (ICIS)–US-listed shares of chemical companies surged on Monday after the US and China agreed to a 90-day pause on the tariffs they imposed on each other since 2 April. The lower rates take effect on 14 May. For the US, it will lower its 2025 tariffs on Chinese imports to 30% from 145%. The 30% tariff is made up of the 20% fentanyl tariffs that the US adopted earlier in 2025 as well as the 10% baseline tariff that the US has imposed on most of the world. For China, it will cut its 2025 tariffs on US imports to 10% from 125%. The 10% tariff matches the baseline rate that the US has imposed on Chinese imports. China also suspended the non-tariff measures that it has taken since 2 April. The agreement does not mention the tariffs that China had imposed in February on a limited number of US imports, including liquefied natural gas (LNG). Nor does the agreement mention the restrictions on antimony and other minerals that China announced in December 2024 as well as those on bismuth and other minerals announced in February 2025. Monday's pause does not change the tariffs that the two countries adopted during the first term of US President Donald Trump. Still, the agreement removes a substantial amount of tariffs that had brought trade between the two countries to a standstill. The following table shows the major indices followed by ICIS. Index 12-May Change % Dow Jones Industrial Average 42,132.68 883.30 2.14% S&P 500 5,805.53 145.62 2.57% Dow Jones US Chemicals Index 820.86 15.57 1.93% S&P 500 Chemicals Industry Index 876.52 13.94 1.62% PAUSE WILL RESTORE TRADE BETWEEN US AND CHINAPrior to Monday's announcement, trade between the US and China had nearly halted. The US exported large amounts of polyethylene (PE) and monoethylene glycol (MEG) to China. China, in turn, exported large amounts of methylene diphenyl diisocyanate (MDI), polyether polyols and polyester fibre to the US. The following charts show the chemical trade between the two countries. China imported large amounts of chemical feedstock from the US to supply its ethane crackers and propane dehydrogenation (PDH) units. China had supposedly waived its tariffs on US imports of ethane but maintained those on liquefied petroleum gas (LPG). The US imported large amounts of auto parts and other goods that incorporated large amounts of plastics and chemicals. The high US tariffs on Chinese goods caused China to divert shipments to southeast Asia and other parts of the world. Those increased shipments from China displaced locally manufactured goods, leading to a chain reaction that lowered demand for the plastics and chemicals that those local manufacturers used to make those products that were now being supplied by China. US CONTINUES TO ROLL BACK TARIFFSMonday's announcement is the most recent example of the US pausing its tariffs. These started with the pause that the US adopted on the 25% tariffs it imposed on imports from Canada and Mexico. Later, it paused the reciprocal tariffs that it imposed on most of the world on 2 April. The US maintained the 10% baseline tariffs that it announced that same day. The US later announced exemptions on semiconductors and electronics. Recently it reached an agreement with the UK that lowered the sectoral tariffs that the US imposed on automobile and other specific goods. PERFORMANCE OF US CHEM STOCKSThe following table shows the performance of the US-listed shares followed by ICIS. Name $ Current Price $ Change % Change AdvanSix 24.21 1.10 4.8% Avient 38.82 2.02 5.5% Axalta Coating Systems 32.73 1.63 5.2% Braskem 3.77 0.15 4.1% Chemours 11.88 0.82 7.4% Celanese 55.30 4.09 8.0% DuPont 71.17 4.40 6.6% Dow 31.34 1.86 6.3% Eastman 82.06 4.56 5.9% HB Fuller 56.59 2.06 3.8% Huntsman 12.96 0.91 7.6% Kronos Worldwide 7.63 0.35 4.8% LyondellBasell 60.80 3.87 6.8% Methanex 34.61 2.17 6.7% NewMarket 639.35 4.87 0.8% Ingevity 41.95 1.48 3.7% Olin 22.99 1.66 7.8% PPG 113.84 5.08 4.7% RPM International 114.26 3.73 3.4% Stepan 55.99 2.09 3.9% Sherwin-Williams 357.86 6.00 1.7% Tronox 5.78 0.53 10.1% Trinseo 2.62 0.10 4.0% Westlake 86.18 6.18 7.7% Thumbnail shows stock charts. Image by Shutterstock

12-May-2025

LONDON (ICIS)–Fertiglobe has agreed to acquire Wengfu Australia’s distribution assets as part of a strategic expansion strategy, the urea and ammonia producer said on Monday. The acquisition will expand the Abu Dhabi-headquartered firm’s downstream reach and enhance access to Australian customers. It currently supplies around 600,000 tonnes/year of urea to the country. The purchase price of Wengfu will be based on net asset value plus a premium of around $8 million, with the final amount to be determined at closing. “Acquiring Wengfu’s assets marks a strategic step in our value-driven growth strategy and accelerates our commercial footprint in Australia, one of the world’s fastest-growing agricultural regions,” said Fertiglobe CEO Ahmed El-Hoshy. Fertiglobe said the transaction was expected to be 2.8% and 4.1% earnings per share (EPS) accretive before synergies in 2026 and 2027 respectively. Closing of the deal is subject to customary regulatory and legal approvals, it added in a statement.

12-May-2025

Serbian utility EPS inks long-term PPA from 168MW wind farms This could accelerate energy plans, boost PPA plans and have a bearish impact on spot power prices in the region The country plans to have 1.3GW renewable capacity by 2027 WARSAW (ICIS)–The signing of a new power purchase agreement (PPA) is set to support Serbia's energy transition plans by 2027, local traders told ICIS. This comes as state utility Elektroprivreda Srbije (EPS) announced a 15-year PPA from two wind farms (Alibunar 1 and Alibunar 2) with a total 168MW capacity, EPS said on 8 May. “EPS will take over all the produced electricity, and the purchase and balancing price is determined on market principles, which provides an incentive to investors and allows EPS to make additional profits. This energy will also provide significant, additional security for the operation of our electricity system and the supply,” said Dusan Zivkovic, CEO of EPS. “EPS receives cheap green energy, while investors benefit from a guaranteed 15-year PPA and an auction premium. As an association, we advocate for the third round of auctions to take place as soon as possible, alongside the adoption of appropriate regulations and a new three-year auction plan,” said Danijela Isailovic, manager at local renewable group OIE Serbia, in a statement on 8 May. In 2028, this capacity will be increased by 1GW from self-balancing power plants EPS is developing with a strategic partner, and renewable production is expected to reach 50% of EPS's total electricity output, added Zivkovic. MARKET IMPACT “This PPA is a milestone for Serbia as it will be a bearish driver for the local market spot market as renewable capacity takes over a large percentage of the current coal output,” a local trader told ICIS. EPS's PPA will encourage the local industry to forge more PPA deals, added another market participant. “Over the coming years, we expect at least an additional 1GW of auction-winning plants to be built and new PPAs to be signed,” a local developer told ICIS. TRANSITION PLANS The large investors' interest in Serbia's recent second renewable tender is set to support Serbia's energy transition plans by 2027, energy minister Dubravka Dedovic Handanovic said in February. The total capacity awarded was 645MW and the offered prices were "competitive", resulting in €50.9/MWh for solar and €53.5/MWh for wind, "significantly below market levels", said Handanovic. Both auctions are supported through a contract-for-difference (CfD) scheme for 15 years. All renewable plants should be online by 2027 as the country targets at least 1.3GW of new renewable capacity by the same period. Currently, Serbia has 4.4GW of coal-fired power, with coal and gas units representing 75% of the country’s energy mix, grid operator EMS data indicated.

12-May-2025

LONDON (ICIS)–Economic growth in the eurozone grew more than initially thought in April but remained subdued as demand conditions weakened. The eurozone composite purchasing managers’ index (PMI) was revised up by S&P Global from its flash estimate but was still at a two-month low of 50.4, down from 50.9 in March. The group’s eurozone services business activity PMI for April was also revised up but only to a five-month low of 50.1, down from 51.0 in March. A PMI reading of below 50.0 signifies contraction. S&P said its April HCOB (Hamburg Commercial Bank) PMI data showed a sustained upturn in private sector business activity across the eurozone since the start of the year, but the trend was “subdued and well below its long-term average.” Soft demand conditions were limiting the speed of growth, the market intelligence firm said in a statement. "Eurozone economic growth slowed at the start of the second quarter, following a pick-up in the first three months of the year,” said Cyrus de la Rubia, chief economist at HCOB. “The services sector, which is a major player, practically stagnated in April. Even though manufacturing output saw a surprising uptick, it wasn't enough to prevent the overall slowdown in growth.”

06-May-2025

SAO PAULO (ICIS)–Mexico remains the potential largest victim of the change in US trade policy, but practically no country in the world would be spared from an impact, analysts said this week. Mexico, Brazil GDP growth forecasts cut Mexico’s manufacturing impacted by US tariffs on automotive Latin American high interest rates to fall faster to prop up economy US high costs to still deter many manufacturers to relocate MEXICAN ISSUESIn a string of forecasts published by analysts at credit rating agencies and consultancies, Mexico was singled out as one of the countries most affected by US tariffs. Meanwhile, chemicals sources in Mexico have recently said demand has taken a turn for the better, especially after the US fell short of announcing any additional tariff on the country. However, other macroeconomic indicators have been mixed. On the negative side, the manufacturing purchasing managers' index (PMI) fell further into contraction in April and added its 10th consecutive month in the red. On the other hand, Mexico's GDP grew by 0.2% in the first quarter, compared with the first, a higher-than-expected figure which allows the country to avoid for the moment a technical recession – two consecutive quarters with negative growth. Mexico and Canada form, together with the US, the North American free trade zone under USMCA. Canada was also spared from any additional tariffs, but the two countries were already subject to some import tariffs implemented in February on sectors such as automotive or steel, among others. And it is the automotive tariffs, if prolonged in time in their current form, that could greatly dent Mexico’s economy, given the sector’s importance within manufacturing – it is a large global automotive producer, churning out nearly 3 million vehicles/year, of which around 80% are exported to the US. This week, London-headquartered consultancy Oxford Economics said it expects Mexico’s GDP growth to be flat in 2025, which is somewhere in the middle between the International Monetary Fund's (IMF’s) forecast for a contraction of 0.3% and market consensus, which still sees some growth of a few tenths of a percentage point. "Mexico is the most open economy in the region with bilateral trade accounting for nearly 80% of GDP, out of which exports to the US account for over 25% of GDP. In fact, nearly 80% of all Mexican exports are directed to the US and currently face 25% tariffs on non-USMCA compliant goods on top of steel and aluminium," said the analysts at Oxford Economics. The only Latin American country where investments are expected to grow in coming years is Argentina, the analysts added, while the rest of the region will post a slowdown, while Mexico will potentially see investments contracting. "Uncertainty around the future trade relationship with the US and the protection that the USMCA can bring is threatening billions in US investment,” said Oxford Economics. “The scale of this threat is substantial – last year alone, US investment in Mexico reached $16 billion, accounting for nearly half of the country's total foreign direct investment. Even more concerning, over the last two decades, the US has invested over $300 billion in Mexico, creating a massive economic stake now under threat.” Analysts at BMI, a subsidiary of US credit rating agency Fitch, agreed that fixed investment is to fall sharply this year, a factor which could tip Mexico’s economy into recession in 2025. However, BMI’s report was published before Mexico’s statistical office Inegi said earlier this week that GDP growth in the first quarter stood at 0.2%, quarter on quarter, which is a weak figure but nonetheless allowed Mexico to avoid a ‘technical recession’ – two consecutive quarters with negative growth – for the time being. BMI cut its growth forecast for Mexico in 2025 and now expects a contraction in GDP of 0.5%, sharply lower than its prior forecast for modest growth of 0.2%. “The economy was already struggling prior to the latest shifts in US trade policy, with output having declined by a significant 0.6% quarter on quarter in Q4… Granted, it will only face an effective tariff rate of roughly 7.5% once all exemptions are accounted for (below the US’s weighted average rate of closer to 20%),” said the analysts. “But there is little incentive for firms expand their presence in Mexico when so much remains in flux. Combined with spillover effects from a more downbeat outlook for growth in the neighboring US (felt via reduced exports and softness in remittances), the likely trajectory for the Mexican economy is a challenging one.” S&P CUTS GDP GROWTH FORECAST – AGAINTrump’s second term seems to have brought even more uncertainty than the first, and analysts these days say their forecasts could be futile and valid only for a matter of hours. It is what US credit rating agency S&P said this week, as it downgraded GDP growth forecasts for Latin America’s two largest economies – Brazil and Mexico – as well as the world’s, including the US itself. “Our baseline forecasts carry a significant amount of uncertainty. As situations evolve, we will gauge the macro and credit materiality of potential and actual policy shifts and reassess our guidance accordingly,” it began. To make their point clear, they added a note after detailing what tariff scenario they consider likely to stay in the medium term which read: “A note of caution about our latest revisions: we are in uncharted territory.” S&P latest revisions assume the following: A 10% across-the-board tariff on imports from all US trading partners as announced on 2 April, but not the country-specific tariffs now on a 90-day pause. A 25% US import tariff on autos, steel, aluminium, pharmaceuticals and semiconductors. The revisions include the “fully escalated tariffs” between the US (145% on Chinese imports) and China (125% on US imports), net of the carve-out for electronics imports into the US. The results of this are likely to cause a more pronounced economic slowdown across the board. GDP forecasts by S&P (change in %) 2025 Change from March forecast 2026 Change from March forecast 2027 Change from March forecast 2028 Change from March forecast Brazil 1.8 -0.1 1.7 -0.3 2.1 0.0 2.2 0.0 Mexico -0.2 -0.4 1.5 -0.2 2.2 0.0 2.3 0.0 US 1.5 -0.5 1.7 -0.2 2.1 -0.1 1.9 0.1 Canada 1.4 -0.3 1.5 -0.4 2.1 0.0 2.1 0.3 World 2.7 -0.3 2.6 -0.4 3.3 -0.1 3.3 0.0 The rest of Latin America will fare slightly better, when compared with Mexico’s outlook, not least because most countries in the region are likely to face a 10% tariff if no deal with the US is reached. Brazil’s economy, in any case, was widely expected to slow down after three years of bumper growth which led to widely extended fears by the end of 2024 of economic overheating. Further afield, forecast revisions have been less severe for most countries than for the global economy at large. BMI said Peru, Chile and Colombia are expected to maintain "relatively healthy and stable growth rates" with three countries, as well as Brazil, having a significantly lower dependence than Mexico on exports to the US, which could insulate them somewhat from direct trade war impacts. Argentina will be the exception as the country makes an attempt at an economic spring after years in the doldrums and a deep recession in 2023-2024. Overall and for the region, the current crisis could have at least one silver lining: as growth slows down, central banks will be keener to lower still-high interest rates to prop consumption. Rates across the region remain above historical average, even if the inflation crisis has subsided in most economies. Brazil’s rates currently stand at 14.25%, Mexico’s at 9.0%, Colombia’s at 9.25%, while Chile's have come down considerably and stand at 5.0%. Still a long way from economic normalization, Argentina's interest rates stand at 29%, in response to an inflation which still stood at 56% in March. “Central banks in Latin America are likely to cut more aggressively given that their current policy rates are above neutral. The recent appreciation of EM currencies against the US dollar leaves central banks with more scope to cut rates across the countries we cover,” said S&P. The analysts added that the combination of stronger currencies in emerging markets – Latin American economies fall under that category – and lower oil prices will help decrease inflation, given most of those economies are net importers of energy. A FINAL REFLECTIONS&P concluded saying that no matter how much President Trump would like to bring as much manufacturing back to the US as possible, current global trade and industrial trends make that scenario very unlikely. This could stem from Trump’s fixation on manufactured goods, without taking into account the trade balance in services, which mostly and largely favors the US in most cases, or the difference between savings by US consumers and companies and investment. S&P said US tariffs – in full or in part – are unlikely to substantially narrow the US trade balance, because its current account deficit will only narrow to the extent that the savings-investment difference narrows, and that would require some combination of lower investment (and slower growth) and higher savings (and less consumption). “If the tariffs do not materially move the US savings rate, then they will simply shift the trade balance between partners as exports minus imports remain unchanged. It's also hard to see the US tariffs causing a wholesale return or reshoring of US manufacturing. Decades of trade driven largely by comparative advantage means that production is currently located where it is most cost-effective.” Taking the case of Asian supply chains, the cost of production there is often only a fraction of the cost of producing the same product in the US, or Europe; the currently proposed tariff rates are unlikely to close that gap. “To put it another way, relocating a large swath of goods back to the US would likely involve a substantial increase in costs,” the analysts at S&P concluded. Front page picture source: Mexico's automotive trade group the Asociacion Mexicana de la Industria Automotriz (AMIA) Insight by Jonathan Lopez

05-May-2025

SINGAPORE (ICIS)–Manufacturing purchasing managers' indices (PMIs) tumbled across most of Asia in April, led by a decline in new orders amid global trade uncertainty that will likely continue to weigh on exports and production. China, South Korea new export orders contract significantly amid trade uncertainty China's manufacturing PMI falls into contraction, 16-month low in April Production may be shifting to India amid evolving trade landscape This is the first PMI reading since US president Donald Trump imposed 10% baseline tariffs on all countries and a 145% tariff on China; already, six out of eight economies that have reported April data as of 2 May have PMIs in contractionary territory. A robust PMI above the 50-threshold, signaling expansion in a country's manufacturing sector, generally corresponds with increased petrochemical output, as greater industrial activity fuels demand for essential inputs such as plastics, rubbers, and solvents. "Unsurprisingly, export-oriented economies in the region are bearing the brunt of the tariff hit, with new export orders in China and [South] Korea having fallen sharply into contractionary territory," Japan's Nomura Global Markets Research said in a note. The PMIs of domestic-oriented economies such as India and the Philippines, however, are holding up, with the latter experiencing a boost in activity owing to upcoming elections, it noted. "This suggests domestic demand will be pivotal in serving as a growth cushion against external shocks, which means policy stimulus, particularly on the fiscal side, is likely to gain traction," Nomura analysts said. A combination of escalation and de-escalation in tariff policy is likely to breed uncertainty and lead to a slowdown in capital expenditure, they added. South Korea's manufacturing sector health deteriorated more sharply in April,  marking the lowest reading since September 2022 and the third consecutive month of worsening business conditions. April saw a sharper contraction in production levels at South Korean factories, with output falling significantly at the beginning of the second quarter, according to S&P Global. This marked the second consecutive month of declining production, as companies frequently attributed the decrease to falling new orders and the impact of US trade policy. The latter also affected foreign markets, as South Korean goods producers recorded the first reduction in new export orders in six months, it added. Japan’s manufacturing PMI, meanwhile, inched higher to 48.7 in April from 48.4 in March but new orders and new export sales continued to weaken. While consumer goods producers enjoyed a "renewed improvement in the health of its sector," operating conditions weakened for both intermediate and investment goods segments, according to au Jibun Bank. Overall new work fell at a solid pace that was the quickest since February 2024, the bank noted, with firms frequently pointing to "subdued client spending at home and abroad." With manufacturing slowing down and weakening exports, Japan's economic outlook is tilted to the downside, prompting the Bank of Japan to substantially lower its growth forecasts for the year on 1 May. CHINA PMI FALLS BACK INTO CONTRACTIONManufacturing activity in bellwether China fell to a 16-month low in April as the impact of tariffs started hitting producers. China's official April manufacturing PMI fell to 49.0 from 50.5, marking a 16-month low. By category, the most significant monthly decline was in new export orders, dropping to 44.7 from 49.0, illustrating the initial impact of tariffs. Overall, the new orders sub-index decreased to 49.2 from 51.8, and the production sub-index also contracted, to 49.8. The PMI data indicates a potential strengthening of deflationary pressures, Dutch banking and financial services firm ING said. Specifically, the ex-factory price sub-index reached a seven-month low of 44.8, while the raw materials purchase prices sub-index fell to a 22-month low of 47.0. Furthermore, the import sub-index, at 43.4, hit its lowest point since January 2023, suggesting that a significant drop in US demand due to tariffs could intensify price competition among manufacturers, according to ING. A silver lining was a better-than-expected Caixin PMI reading, which surprisingly remained in expansion at 50.4. Markets had been expecting this PMI gauge to underperform, ING said, adding, "this is because the survey sample size traditionally has a larger proportion of exporters and private firms". TARIFFS A LOSE-LOSE PROPOSITIONWhile China appears to be holding up well in the early stages of the tariff test of endurance, there is a "clear negative shock taking place", ING noted. "But, all things considered, survey data suggests the shock may be less than what the more bearish market participants feared." China’s exports to the US represent around 14-15% of total shipments, much of which may have ground to a halt in April, ING chief economist, Greater China, Lynn Song said. "We suspect the shock on Chinese US-bound exports will be significant, causing a double-digit year-on-year decline in both exports and imports," he added. The import frontloading in the first quarter of the year likely enables companies to do this for some time, with varying estimates on how long these inventories would last, ING said. "We expect April's trade to show the biggest decline in terms of China's exports to the US. This is because importers have been in wait-and-see mode, hoping trade talks might lead to lower tariffs," it said. However, once inventories are depleted, assuming there's no easy substitution product available, companies will face a choice between paying tariffs or discontinuing sales, ING added. SIGNS OF PRODUCTION SHIFTING TO INDIAIndian manufacturing surged in April, fueled by the quickest output growth since June 2024 amid strong order books. The HSBC India manufacturing PMI edged up to 58.4 in April from 58.1, signaling the sector's strongest overall improvement in 10 months, driven by accelerated increases in inventories, hiring, and production. "The notable increase in new export orders in April may indicate a potential shift in production to India, as businesses adapt to the evolving trade landscape and US tariff announcements," said Pranjul Bhandari, chief India economist at HSBC. Input prices increased slightly faster, but the impact on margins could be more than offset by the much faster rise in output prices, of which the index jumped to the highest level since October 2013, Bhandari added. Visit the ICIS Topic Page: US tariffs, policy – impact on chemicals and energy Insight article by Nurluqman Suratman

02-May-2025

LONDON (ICIS)–UK manufacturers hit a two-and-a-half year high in cost inflation in April, as output, new orders and employment all fell. The UK Purchasing Managers’ Index (PMI) was pitched at 45.4 points in April, up from the 17-month low of 44.9 in March showing that the rate of decline softened on the previous month. A reading 50.0 points indicates contraction. “Manufacturers are also seeing an increasingly harsh cost environment, with purchase price inflation hitting a 28-month high, ''  Rob Dobson, Director at S&P Global Market Intelligence  said in the report published 1 May. Market sentiment is bearish on the prospect of US tariffs sending the global economy into disarray, causing a drop in intake of new work from domestic and international markets. New export orders fell at the quickest pace in almost five years on falling demand from the US, Europe, and mainland China. A drop in confidence was seen for business-to-business clients and end consumers. Business optimism for the coming twelve months dropped to a 29-month low, with only 47% of companies surveyed expecting a rise in output because of rising costs, lower staffing rates and stock levels. Job losses continued to fall for the sixth month in a row, and the second sharpest rate in five years (beaten only by February 2025). Despite poor demand, average lead times increased for the sixteenth straight month due to supply chain pressures including freight delays, as well as supplier constraints with low stock or staffing.

01-May-2025

SAO PAULO (ICIS)–Mexico’s chemicals fortunes seem to be turning for the better after the country was spared from the most punitive US’ import taxes, according to an executive at chemicals distributor major Ravago’s Mexican subsidiary. Pedro Escalona, sales director at Entecresins Mexico, said demand for most polymers has notably picked up in the past weeks, with order which were on hold now flowing to more optimistic customers. Among the main polymers, only polypropylene (PP) remains in the doldrums, said Escalona, haunted by low prices for the monomer. Overall though sentiment is on the up and has been so especially since 2 April, when the US announced sweeping tariffs but spared its trade partners within the USMCA free trade zone, Mexico and Canada. Prior tariffs in some sectors, however, remain, and Escalona said automotive seems for now the most problematic sector. “For the rest, people seem to start assuming Mexico will be spared from the worst possible scenario,” said Escalona. WHAT ONE MONTH CAN CHANGESpeaking to Escalona, practically everything seems to have changed in one month, with exception of PP. In an interview with ICIS during the plastics trade fair Plastimagen in Mexico City in mid-March, the Entec executive painted a doom-and-gloom picture of both chemicals and wider manufacturing, with falling prices and domestic and overseas woes mounting. As of Thursday, 24 April, this is what he had to say: “Even a month ago, or even less, even two weeks ago, there were a lot of people holding orders, saying they were unsure whether they would need the product for May, or even for June. Some large clients, while not cancelling any orders, were starting to say they may need to lower consumption going forward,” said Escalona. “But in the last few weeks, there is more confidence in general, and people are already confident in going out to make purchases. Everyone seems to be more optimistic in that we don't think anything will finally happen that will significantly affect Mexico’s economy.” A stone on the positive story, however, remains the large, petrochemicals intensive automotive sector on which US President Donald Trump had imposed tariffs prior to 2 April. Analysts have said the tariffs, in their current form, could greatly dent the sector’s competitiveness. But sources in chemicals remain optimistic Mexico could use this chance to increase its USMCA compliance, mostly related to rules of origin which would at the same increase its manufacturing stance and integrate it even more with the US economy. As the US tries to contain China’s formidable rise in global supply chains, other sources have said the US would shoot itself on the foot going against Canada and Mexico, economies which are now well integrated within the North American free trade zone. The battle should be, they said, North America as a block versus the other large trading blocs. “Automotive still has over its head a lot of uncertainty, because there are some issues that haven't been fully defined yet regarding automotive components. That's the only one that still has some uncertainty,” said Escalona. “Demand is not the best it could be, but it is not too bad either. PP is still suffering from low prices for the monomer, which is expected to fall further. But for the rest of plastics, PE [polyethylene], PS [polystyrene], and for PET [polyethylene terephthalate] there has been some notable price rises.” Escalona said that US companies must have done their important bit of lobbying to the Trump administration about how harming tariffs on Mexico could be for them, as well. The absence of Mexico and Canada on the board Trump exhibited on 2 April quickly raised the prospects that, behind the scenes, renegotiation of the USMCA deal is well underway, an assessment Escalona deemed possible. But equally, he said there may be starting to be a realization within the Trump administration that punitive, sudden import tariffs to certain countries – not least China – would deprive the US of key markets it needs to sell materials of which it is oversupplied. “[Very punitive tariffs on Mexico] Just wasn't convenient for the US. We’ll need to see what happens, but I think the US is also going to have to sit down and negotiate with China. The US is full of raw materials it exports to China – monomers such ethane, propane, benzene… That’s why prices are falling,” said Escalona. “There are many things they plan for, and the initial strategy was to renegotiate with tariffs as a pressure measure. But clearly, they are going to have to reconsider this and fine-tune several aspects.” DOMESTIC FRONT: LESS OPTIMISMWhile most analysts think Mexico has done good progress on issues key for Trump, such migration at the border and stricter measures to control fentanyl trade – a powerful drug which has caused havoc across the US – the domestic policies of President Claudia Sheinbaum remain a red flag for many chemicals players. With a declared intention to expand the welfare state, Mexico may be turning into the ‘nanny state’ which does not incentivize competitiveness, some sources said at Plastimagen. Moreover, fiscal policy has been loose under Sheinbaum’s predecessor, also from the left-leaning Morena party. The expansion in the welfare state was mostly funded by debt, and fiscal deficits were recurrent. Sheinbaum has promised to remedy that and seems more open to the necessary private investments needed in Mexico to propel it to be a key part in the nearshoring trend – North American companies bringing manufacturing facilities closer to home. But Sheinbaum has ploughed through other measures in parliament which are worrying business. Thanks to the supermajority of two thirds of seats in Parliament voters granted Morena in June 2024 – and propelled Sheinbaum to the top with 60% of popular vote – the government approved a judicial reform, which most analysts agree is to weaken the rule of law, in a country much needed of stronger rule of law. A key measure in the bill was that judges would be elected by voters, which has sparked fears the well-funded and strong organized crime will have it easier to silence the judiciary. Escalona, not impressed, said those elections for judges have started and told how he feels weird seeing advertisements by candidates on boards or media outlets. Seeing adverts to vote for judges clearly does not feel right, he came to say. “We have had plenty of politicians who were not prepared or educated for the positions they were chosen for. While it’s not optimal, it can be expected in a democracy. But the job of a judge, and in country like Mexico, is a completely different matter,” he said. “And, invariably, you can see all kinds of people running to be judges. It’s tremendous. We’ll need to see how this pans out, but everyone seems to agree that this will weaken the rule of law – and that is not good for economic development and stability." Interview article by Jonathan López Clarification: Re-casts subsidiary name in paragraph two. Entec Polymers, as written previously, is Ravago's subsidiary in the US

24-Apr-2025